During my day trading journey, I have made 20% return on initial capital investment in a half year and lost it all in one single month. At that point, I lost 30% in 10 trades the next 40 days. I have procured and lost hundreds of dollars, and nearly blew my whole record twice. I got many margin calls, attempted various AI methods, and traded numerous markets, timeframes and instruments. I have committed any conceivable error, yet by one way or another I endure and took in a ton.
Trading Journal
You hear a great deal about how trading journals are significant, yet truly, no one keeps one. You believe it’s pointless on the grounds that you see your trades anyway in the trading platform and when all is said in done you believe it is a waste of time. You are just inspired by your rewards and how much cash you make. In the long run you should grow up as a trader, and you will acknowledge how significant the trading journal is.
Staying up with an updated trading journal will improve everything. From commissions and chances to assets you trade. You will learn more than you might suspect, and will diversely improve your way of trading. I began running a Google Sheet as a trading journal. Multi week in the wake of running the journal, I understood my danger was too high and my trades were excessively little. Successfully I was risking far more than 1 to 3 (Risk to Reward); the truth was near 1 to 5 in light of the fact that my trades were excessively little.
Risk
On different occasions during my trading journey, I was having a sense of security and thought I have nailed it. I felt like there is not anything that can astonish me, and repeatedly I was smacked in my face by the market. Single trade turning out badly and clearing out your past 10 beneficial trades, volatility spikes and your stop losses are hit like paper by knifes and free liquidity transforms into a slaughtering choke on your portfolio, following an awful margin call and your broker fixing the entirety of your situations before it is a complete misfortune.
Trust me, except if you saw that, you believe it is simply war stories and creative mind. People, this is reality, there is no free cash out there. Everything includes risk; it is a matter of how great you are at understanding your chances and your probabilities of misfortune.
As we have found in February 2018, market dread is in some cases genuine. Records began auctioning off, and people flee from ETF and equities to the currencies and gold since cash is the genuine lord. Digital currencies were deserted because individuals understood that evidently raiders would lean toward money and gold versus crypto currencies.
Patience
Perhaps the hardest thing to achieve during day trading is persistence. Now and then, the best trade is not to trade, like Carlsen in chess. Being a day trader implies being a market addict, which suggests addiction and adrenaline surge during the opening bell. Now and again money is above all else, essentially not trading or sitting tight for the fitting trade is all the better you can do, particularly when markets go insane in the midst of sellouts or emergency. Then again, trading resembles air; on the off chance that you do not trade, you do not exist. Dominating this desire is vital to your success. So often, I have been adding to losing positions or attempting to save terminal positions, rather than pausing and keeping the money.
Persistence is likewise pertinent to entries and exits. You will see prices you need, however then they will change the LMT order, and you did not get it. At that point, you will change and pursue the value, which will move once more. Try not to surge and be solid, it requires time. In the long run, you will clutch your sentiments and trust that the opposite side will take it. From my experience if the underlying is liquid, all day trades with center prices will be filled.
In the event that you have a losing trade, there will never be a way out and expiration is week after week, do not race to fix it. The market can bounce, and you will be bare. Your misfortunes could get more modest. I had a bear spread after the market selloff in Feb 2018, and I fixed it with 0.7 loss of the spread width. The following day it became 0.2, so standing by in some cases makes a difference. Never keep your losing positions exposed, markets can generally bounce, regardless of whether it’s one day until lapse.
The Market Roller Coaster
Being profitable for a half year is pleasant, however you can generally lose more than the couple of earlier months. Now and again, the market is merciless and quick like a crocodile. Keep away from those circumstances by playing small. Perhaps the greatest mistake I made was over betting. Risk and position estimating are critical to your success. Having a strategy with high likelihood of winning is as significant as right position measuring and margin prerequisites.
Thinking Like a Market Maker
In the wake of making many manual trades you begin seeing stuff, especially the episodes where you are ripped off like a beginner. Perhaps the most baffling ideas in trading options, other than the commissions is market makers. Market makers are basically the players that manage everything. It is generally realized that organizations like Stronghold, Last and a great deal of other HFT (High Recurrence Trading) players totally control the price in the business sectors. Enormous organizations attempting to purchase or sell are principle focuses for ripping off, in light of the fact that quick players can undoubtedly get before you and sell you a similar stuff in more exorbitant cost or get it from you in a lower cost, and afterward sell or get it to/from another person. Those minor contrasts compound like a snowball.
As referenced previously, commissions are a contributor to the issue, however without them there will be no room to trade. The main problem is market producers feigning the order books. The entirety of the frameworks are automated, and the quick players are wherever to get your exchanges, cheerfully giving you exorbitant costs when purchasing and low costs when selling. The best way to beat it is to use limit orders and attempt to envision the middle price. This a-ha moment appears to be a minor issue, however duplicating 200 trades by 2$ ripping off expenses is like the commissions you pay at any rate, so it resembles paying commissions twice! Never use market orders or bid-ask raw prices, consistently focus on the mid-price or better.
Never Repeat Your Mistakes
Sadly it is idea to apply and an away from of effective trades versus losing trades. Make sure to take a look at yourself before each trade. On numerous occasions, I have done trading botches and repeated them and once more.
Always remember that trading requires a very long time to master and it is an extreme stroll to walk. Your learning process should never stop. Markets are dynamic and alive. It is essential to rethink and top off your strategy base.
Disclaimer: The Content is an opinion and is for information purposes only. It is not intended to be investment or financial advice nor does it constitute an offer to buy or sell or a solicitation of an offer to buy or sell shares or any other assets. Seek a duly licensed professional for investment or financial advice.
I am an Expert Financial Writer with a passion for the global capital markets.